PLR 200517015: Partnership gets more time to elect corporate tax treatment

Plain-English summary

A general partnership wanted to be taxed as a corporation from its formation date, but inadvertently missed the deadline to file Form 8832. Under the entity classification regulations, a domestic entity with multiple owners is treated as a partnership unless it elects otherwise. The IRS found that the partnership met the requirements for an extension under Treas. Reg. § 301.9100-3. It gave the partnership 60 days from the ruling date to file Form 8832, with a copy of the ruling attached, to elect corporate classification from the requested date.

Ruling snapshot

• Question: Could the partnership make a late election to be taxed as a corporation from its formation date?
• Outcome: Approved, with 60 days to file Form 8832.
• Key authorities: Treas. Reg. §§ 301.7701-3, 301.9100-1, 301.9100-3.

Full text (IRS public release)

Internal Revenue Service
Department of the Treasury
Washington, DC 20224
Number: 200517015
Release Date: 4/29/2005
Index Number: 7701.00-00; 9100.31-00

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Person To Contact:
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Telephone Number:
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Refer Reply To:
CC:PSI:2 – PLR-146823-04
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Date:
December 22, 2004

Legend

X: --------------------------------
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A: ------------------------
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B: -------------------------
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C: -----------------------
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State: --------

Date 1: ----------------------

Dear ------------:

This responds to a letter dated August 17, 2004, submitted on behalf of X, requesting that the Service grant X an extension of time under § 301.9100-3 of the Procedure and Administration Regulations to elect to be treated as an association taxable as a corporation under § 301.7701-3(c).

Facts

The information submitted states that X is a general partnership formed under the laws of State on Date 1. X is owned by partners A, B and C. At the time of its formation, X desired to be treated as an association taxable as a corporation. Due to inadvertence, X failed to file a timely election, Form 8832, Entity Classification Election, effective Date 1. Law and Analysis 2 PLR-146823-04

Section 301.7701-3(b)(1) provides guidance on the classification of a domestic eligible entity for federal income tax purposes. Generally, a domestic eligible entity with two or more members will be treated as a partnership unless it elects otherwise. To elect to be classified other than as provided in § 301.7701-3(b), an eligible entity must file a Form 8832, with the service center designated on that form.

Section 301.7701-3(c) provides that an entity classification election must be filed on Form 8832 and can be effective up to seventy-five (75) days prior to the date the form is filed or up to twelve (12) months after the date on which the form is filed.

Section 301.9100-1(c) provides that the Commissioner may grant a reasonable extension of time to make a regulatory election, or a statutory election (but no more than 6 months except in the case of a taxpayer who is abroad), under all subtitles of the Internal Revenue Code except subtitles E, G, H, and I. Section 301.9100-1(b) defines the term “regulatory election” as an election whose due date is prescribed by a regulation published in the Federal Register or a revenue ruling, revenue procedure, notice, or announcement published in the Internal Revenue Bulletin.

Sections 301.9100-1 through 301.9100-3 provide the standards the Commissioner will use to determine whether to grant an extension of time to make the election.

Section 301.9100-2 provides the rules governing automatic extensions of time for making certain elections.

Section 301.9100-3 provides the standards the Commissioner will use to determine whether to grant an extension of time for regulatory elections that do not meet the requirements of § 301.9100-2. Under § 301.9100-3, a request for relief will be granted when the taxpayer provides evidence to establish to the satisfaction of the Commissioner that (1) the taxpayer acted reasonably and in good faith, and (2) granting relief will not prejudice the interests of the government.

Conclusion

Based solely on the information submitted and the representations made, we conclude that the requirements of § 301.9100-1 and § 301.9100-3 have been satisfied. As a result, X is granted an extension of time of 60 days from the date of this letter to file a Form 8832 with the appropriate service center and elect to be treated as an association taxable as a corporation effective Date 1. A copy of this letter should be attached to the Form 8832. A copy is enclosed for that purpose. 3 PLR-146823-04

Except as specifically set forth above, no opinion is expressed concerning the federal tax consequences of the facts described above under any other provision of the Code.

This ruling is directed only to the taxpayer(s) requesting it. Section 6110(k)(3) provides that it may not be used or cited as precedent.

Pursuant to a power of attorney on file with this office, a copy of this letter is being sent to X’s authorized representatives.

Sincerely,

Heather C. Maloy
Associate Chief Counsel
(Passthroughs and Special Industries)

Enclosures (2)
Copy of this letter
Copy for § 6110 purposes